Boom! Did you hear Bush & Bernanke firing the Blarney Cannon today? Bush proposed to use the FHA to bail out subprime borrowers who can't make their mortgage payments, while in Jackson Hole (perfect place for him) Fed Commissar Bernanke promised the Fed would bail out somebody, anybody if the subprime mess began choking the economy. 'Twas not the content, but the intent of their Blarney Shot that floated stocks higher. The content was piddling, not enough to make much difference, but the intent was made plain: we will print as much money as necessary to keep things afloat.

Don't y'all get tired of this nonsense? Wouldn't you like to live under a just and reasonable, even sensible monetary system? Never mind.

Stocks have not yet seen their low. Use any rally to swap stocks for silver & gold. I've been thinking about the last 6 years I've been recommending that, & I believe it's the best recommendation I ever made. I'm making it still. Timing right now is perfect.

Why? Because SILVER and GOLD PRICES are making their first correction of the bull market, completing the correction begun in after the spring 2006 peak. That correction will end by November's end, and silver & gold will begin a rally that will tear the skin off your eyeballs.

Have they bottomed yet? Possible, yet a bit more likely is a lower low in the next two months. Am I sure enough of lower silver and gold prices that I wouldn't buy now? Not at all. Buy some silver & gold. If they drop, buy more.

If I am right that this is the bottom of the first corrective wave, this will be the best buy you ever made. On the upside, if gold closed over 720 & silver above 1500, buy. You'll know the bottom has passed.

The US Dollar has been wounded by the Blarney Cannon, but will recover to rally more, probably for 3 - 6 months. That offers you a chance to get out of any investment that pays dollars -- annuities, CDs, bonds, etc. Go.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.

On this day in history, 24 August 2007 began the hyperinflation that finally destroyed the American dollar. Oh, that destruction had been underway since the Federal Reserve was created in 1913, and the stage had been set in the crisis leading up to 1980. That crisis scared the Fed & Treasury so badly that they wrung out of congress the Monetary Control Act which allowed them to buy or discount any sort of commercial paper, domestic or foreign. That was a power they were reluctant to use, however, until last week when they did repos for some $36 billion, & who knows how much since. Today the Fed announced it will accept asset-backed commercial paper as collateral. Now that comes backed by various assets, car loans, credit card debt, and of course, mortgages, but it's only mortgage backed securities that are in trouble.

In effect, today the Fed announced it will accept even worthless paper as collateral. That's not exactly buying it, but it's close enough.

What meaneth this portent? That the Fed will shoot their mothers in front of a cop, if necessary, to bail out the banking system & Wall Street. It is the signal that they will unhesitatingly destroy the dollar to "save the system." Of course, that will destroy your savings, pension, & investments, but, Hey! Ya can't make an omelette without breaking eggs, right? As long as you hold dollars, you are making yourself the willing victim of this fraud.

If you are waiting for stocks to recover, you will wait in vain. Bottom hasn't been seen yet. Today marks near completion of 50% recovery (13,423.10 would be 50% of fall from 14,000.41), about time for stocks to fall again. Use any rally to get out of stocks. Put the proceeds into silver & gold.

On the Fed's announcement it was banishing common sense from its operations the US dollar index fell nearly 50 basis points. Clearly, I am not the only dolt who interpreted the Fed's announcement as inflationary. Dollar rally aborted, probably will resume.

Silver & Gold both jumped at the Fed's babblings, up 30.2 cents & $9.10. Unfortunately, another crash in stocks may take them down once more. If gold climbs above 670.50 on Monday, it would signal a rise to 688 & big trouble for the Fed. However, also likely is that both silver & gold will trade sideways to lower into the seasonal turnaround time, October-November. If you see gold over 688, just buy all gold you can get and pull your hat around your ears.

Don't be confused: silver & gold remain in a long term bull market, & y'all should buy on every decline. Sell all dollar denominated investments, especially those that entitle you to receive future dollars.

The GOLD/SILVER RATIO may rise as high as 60 while financial panic sends relatively more people scurrying to gold for shelter. Swap gold for silver at any ratio of 59 or more. And yes, swaps even at 57 are a good idea.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.

What a week! It was the worst panic & liquidity crisis since Long Term Capital Management in 1998. The Fed, in collusion with the European & Japanese central banks, has been pumping in liquidity by buying worthless mortgage backed securities that the market won't touch. Lo, that lays to rest forever the deflationary arguments and proves that no matter how much inflation it causes, the Fed & the government will pump in money in any crisis -- even if it ends in hyperinflation. The liquidity crisis is such a powerful downdraft that it sucked down silver & gold with it.This presents us with a magnificent buying opportunity.

STOCKS today gained 233 points (Dow) but remain below critical 13,250 resistance. Since the Plunge Protection Team was formed in 1987, who can say what the "market" is doing? Who knows when it it the market, and when the Nice Government Men doing the buying? It mattereth not, after a short-covering rally, stocks will resume their downward plunge. Look for stocks to grind lower into October. Swap stocks for silver & gold, now, more than ever.

The US Dollar has begun a rally, but kept on getting its jaws slapped this week. Still, it is rallying. Big resistance at 82.35. Could rally all the way to 85. Be cool -- it's only a countertrend rally, and the trend remains DOWN.

GOLD dropped an eye-popping 20 bucks yesterday and SILVER 105 cents. This is the V-bottom correction of the entire first leg of the bull market, offering us a golden (owch!) opportunity to buy in at a low. Gold & silver have seen their lowest, or will within another 4 days. However, they will likely languish sideways until November. Since we can't know exactly where they will stop, start buying silver & gold here. Maximum possible downside is 910 & 600. GOLD/SILVER RATIO may reach 60 or 57.5 during this correction. Any price of 57.5 or more means you should swap remaining gold for silver.

Remain calm. Now, when you are most terrorized, you must control both fear and greed. Remember the long term trend, and go with it. Get rid of stocks & get into silver & gold. Next move up will be the most violent and spectacular.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.

On Friday European stock markets plunged an average 2.8%, Japan, Hong Kong, & Australia dropped more than 2.56%, South Korea fell 4.27 %.

If you've paid close attention over the years, you have many times heard me say that the Fed & other central banks have only two weapons: inflation & blarney. Whenever a crisis occurs -- & crises are frequent in our rotten financial & economic system -- they rush liquidity to the scene, i.e., they inflate. Then they trot out the Fed-head & the Secretary of the Treasury (who usually can't even type or take shorthand) to make pronouncements about how the economy is "fundamentally sound" & other chin-boogie. They fire both weapons: inflation & blarney.

About every 2 years there appeareth a crisis, monetary or financial, that threateneth to take down the whole house of cards -- "systemic risk" they call it so y'all won't grasp what they're talking about. Yet seldom have I seen such a mob of central bankers rushing money to the market to un-seize the engine. I calculate from the conflicting reports that Thursday & Friday they pumped $279.5 billion (with a B): from the ECB $131 billion & $84 billion, from the Fed $18 bn & $38 bn to buy ("repo") mortgage backed securities, which have fallen so low nobody else will touch them, and $8.5 bn from the Japanese.

From the Financial Times, here's what the Fed did: " In the Fed's repo operation, dealers posted securities as collateral and received cash in return from the Fed. Next week, the dealers and the Fed will reverse the trade. Usually, the Fed does not accept mortgages as collateral for repo transactions but the move signals an attempt by the central bank to alleviate financing fears. "Wall Street dealers are seeking the sanctuary of government bonds & are selling their holdings of riskier assets such as mortgages [read: "Mortgage backed securities]. "Traders said that if the financing problems continued & the effective funds rate remained above its target level, the Fed was likely to repeat repo operations until the market settled down." From the Financial Times, 10 August

Now, if you are a person who yet owneth stocks, you are probably puking in your wastebasket today. Own them or not, y'all are beginning to see my point about getting out of stocks & into silver & gold. Yes, SILVER & GOLD were caught in the downdraft with everything else, because when people desperately need to raise cash, they sell the good assets first. Critical was the metal's response at previous lows, and steadfast they stood, bouncing off 1260 & 660.

Make no mistake: one of these days the entire financial system will go off the rails, & the panic will not be contained, but it probably won't be this time. That's why I keep recommending silver & gold, because other than moving out to a farm to grow your own food, they're the only asset that is independent of the financial system (altho the Nice Government Men are busily trying to suppress their prices, an undertaking marked more by failure than common sense.) However, it is possible that the credit panic could precipitate falls in silver & gold that would take them way down for 6 - 12 months & take the Gold/Silver ratio up to 60.

As long as gold stays above 660 & silver above 1250, however, their uptrend remains in force & that nightmare won't take place. Ignore the deflationists' arguments because you have seen today what central banks & governments will do in any financial crisis or debt collapse, namely, they will flood the system with liquidity(inflation) if it destroys their currencies in hyperinflation. We may have a depression, but it will be hyperinflationary and not deflationary.

STOCKS today traded as low as 13,057 before the Nice Government Men & their Plunge Protection Team (sounds like people who clear clogged commodes, doesn't it?) could manipulate the market higher near the close. Meanwhile against gold the Dow dropped again today, to a Dow in Gold Dollars value of G$408.30 (19.752 oz). Against silver, the Dow dropped towards the critical 1,000 oz level to close at 1,032.73 ounces. By the way, stocks have also given a Dow Theory trend-change-to-down signal.

Where will silver & gold go? Will the credit crunch begun in no-good mortgage backed securities take down the whole world? Again, I don't think so because you have all the weight of government, central banks, & silver interest against it, but it's always possible. Yet were awful possibility to eventuate, which would you rather be holding, stocks, bonds, or silver & gold in your own sweaty hands? As I said above, as long as metals hold 1250 and 660, they are still headed up. A really bad panic could push them up overnight by 10%, 20%, or more, above the critical resistance at 1500 and 720, & into the stratosphere.

So, take a deep breath & calm yourself. When I am afraid, I know only one cure: Psalm 56:3-4. It's not the end of the world yet.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.

The GOLD PRICE successfully withstood an attack this week, exactly the sign I was looking for. Today it closed above 667, & has risen strongly in the aftermarket (up $2.00). Next -- probably next week -- gold must beat its July high at 684.20. That takes gold back to its last critical failure at 690, so that whole area from 684 - 690 will be hard fought. From here, my money is on gold. After today, you must buy it.

The SILVER PRICE closed today at 1310, pennies below its 200 DMA at 1312.78, but above the 50 (1302) and 17 (1304) DMAs. It has formed a large falling wedge, which normally resolves in an upside breakout. Silver has not yet done more than keep pace with gold through this move, so the Gold/Silver Ratio is due for a large drop from this 51-ish range. If you are ever going to swap gold for silver, this is the time. And don't forget to buy silver, too, & to buy more silver than gold.

The US DOLLAR INDEX fell back, giving up most of last week's gains, 58 basis points of it today. This is a sick currency, but then, that's no news to anyone who has been watching. A close below 80 risks a plunge to 78.2, the 1992 low. On the other hand, if it stops here it will have built a double bottom for a rally. Can the buck really be reacting to the subprime bad news? Surely that was already in the market. Nay, it hath problems of its own.

STOCKS bounced yesterday, then gave up everything & plunged today to their lowest point yet in this correction. The Dow has now fallen below its 50 day moving average (13,562). Nothing -- no support -- now stands between here and the 12,785 February high -- call it 12,666 where much trading took place. The broader S&P500 took an even bigger hit today. Stocks will go lower next week. There will come a rally, but it, too, shall pass. Use every such opportunity to swap stocks for silver and gold. Get out while you still can. Sauve qui peut!

The DOW IN GOLD DOLLARS has fallen thru the crucial G$415 (20.076 oz) level, and thru its 200 DMA (G$407.14/19.695 oz). Now loometh the even more critical G$400 (19.35 oz) level. The DiG$ had mounted a rally from its 14 July 2006 low at G$333 (16.109 oz) to G$436 (12.092 oz) in October 2006, backed off to G$369.75 (17.887 oz), then climbed again to challenge G$436. At that point, it had also climbed above the long term downtrend line, but that challenge failed. Now the DiG$ is poised at that downtrend line, and has a long, long fall coming. Stocks are in big trouble against gold.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.

Wednesday, August 01, 2007

SILVER & GOLD PRICES dropped today, but still in an uptrend with rising bottoms. As long as they don't drop through 1275 and 659 they'll be fine. That would make tomorrow a great day to buy silver & gold. Big rally coming. Delay at your own peril.

What happened today?

If I were the Nice Government Men on the Plunge Protection Team, with the impossibly unconstitutional job of protecting Wall Street & its profits, I would defer manipulating until the market had run through several bad days and just about run out of downside steam. Then, when all the naïve have shorted stocks and are most vulnerable, I would begin buying S&P500 futures, & so drive up the price, catch the shorts naked, panic them, and have them buy up the market for me.

Whoops. Wonder what happened today, when the Dow turned around after most of the day in losing territory (low was 13,132.65) and closed up 150. Wonder how that happened? No matter. Dow in Gold is trending down still.

To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $1,250.00; silver's primary is up targeting 16:1 gold/silver ratio or $78.13; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down.